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charters for the jet and also required additional safety checks,
which increased BHJ’s expenses.
Thus, although petitioners did sustain large losses during
each of the relevant years and in fact through the duration of
the activity, the unforeseen circumstances were a factor in the
losses petitioners encountered in the jet charter activity.
Also, several indications showed that the prospects of the jet
charter activity were improving over time. These circumstances
partially mitigate petitioners’ long history of losses from the
jet charter activity.
7. The Amount of Occasional Profits, If Any, Which Are
Earned
We next consider the amount of occasional profits, if any,
petitioners earned from the jet charter activity. Occasional
profits the taxpayer earned from the activity, in relation to the
amount of losses incurred, the amount of the taxpayer’s
investment, and the value of the assets used in the activity
provide useful criteria in determining the taxpayer’s intent.
Sec. 1.183-2(b)(7), Income Tax Regs. A practical possibility
that a taxpayer could earn enough money in a year to exceed
expenses also can indicate a profit objective. Bolt v.
Commissioner, 50 T.C. 1007, 1014 (1968).
Petitioners incurred losses from the jet charter activity
for each year beginning with 1985, when they began the activity,
through 1997, when they ended the activity by selling the Falcon.
As discussed above, there was a general trend of increasing net
cash flow and decreasing losses from the jet charter activity
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